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Corruption and cross-border investment in emerging markets: Firm-level evidence

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  • Javorcik, Beata S.
  • Wei, Shang-Jin

Abstract

This paper studies the joint impact of corruption on the entry mode and volume of inward foreign direct investment (FDI) using a unique firm-level data set. We find that corruption not only reduces inward FDI, but also shifts the ownership structure towards joint ventures. The latter finding supports the view that corruption increases the value of using a local partner to cut through the bureaucratic maze. However, R&D intensive firms are found to favor sole ownership.

Suggested Citation

  • Javorcik, Beata S. & Wei, Shang-Jin, 2009. "Corruption and cross-border investment in emerging markets: Firm-level evidence," Journal of International Money and Finance, Elsevier, vol. 28(4), pages 605-624, June.
  • Handle: RePEc:eee:jimfin:v:28:y:2009:i:4:p:605-624
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    More about this item

    Keywords

    Corruption Developing countries Foreign direct investment Multinational firms Joint ventures;

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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